• Bloomberg reported that US farmers across the Corn Belt are rushing to buy cheap diesel for the spring planting season amid the coronavirus slump and Saudi crude supply shock. According to an industry expert, savings for growers on a medium-sized 3,000-acre farm could reach US$10,000. Another industry player said that while many growers are moving quickly to fill up fuel tanks before the planting season begins, larger farms are hedging even further out, locking in fuel prices for 2021F.

• Reuters reported that India’s sugar exports to Malaysia so far this year have nearly tripled over the figure in the whole of last year. Trade data showed that Malaysia has imported 324,405 tonnes of raw sugar from India so far this year compared with 110,000 tonnes in 2019 and 313,406 tonnes in 2018. An industry player said that Malaysia’s raw sugar purchases could easily surpass 400,000 tonnes this year as some shipments are still in the pipeline.

• According to Reuters also, Brazil’s oil company, Petrobas has cut gasoline prices at the refineries by almost 10%. This could boost raw sugar production and reduce ethanol output. The reduction in gasoline prices has made gasoline more competitive than ethanol, which would affect the demand for the biofuel and prompt sugar mills to switch production to sugar instead of ethanol.

• S&P Global reported that Argentina’s second crop of soybeans has suffered irreversible damage of up to 80% in the primary producing regions due to the drought in the past few weeks. In Argentina, the first crop of soybeans is planted in late October while the second crop of soybeans is planted in November, immediately after the harvest of wheat. Due to the drought, which started in February 2020, the Rosario Board of Trade has reduced Argentina’s 2019/2020F soybean production by 3.5mil tonnes from 51.5mil tonnes previously. Incidentally, Chinese buyers prefer Brazilian and US soybeans over lower priced Argentinian beans as Argentinian beans do not have a high protein count.

• Reuters said that US soybean shipments in January 2020 have rebounded from last year’s trade war levels but volumes and sales are still off the normal levels. Soybean exports in February were also alarmingly low, raising concerns for the rest of the 2019/2020F season. According to the US Census Bureau, the USA exported 5.32mil tonnes of soybeans in January 2020, up 10% from last year but down 19% from the average between 2014 and 2018. About 40% of the soybeans in January 2020 were exported to China vs. the average of 62% from 2014 to 2018.

• Bloomberg reported that China is scooping up Brazilian soybeans as currency weakness spurs farmer sales. Sources said that China picked up more than 10 cargoes in Brazil last Tuesday for shipments mostly in May and June. Brazilian farmers had sold 61% of this season’s crop as at 6 March compared with 50% a month earlier. Forward sales for the next crop have also accelerated with offers coming close to spot prices.

Source: AmInvest Research - 23 Mar 2020